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How Time Warner’s Turner Views Its Affiliate Fees Outlook

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Turner’s affiliate fees outlook

Time Warner’s (TWX) Turner business earns a majority of its revenues from affiliate fees and advertising. Management was asked at the MoffettNathanson Media & Communications Summit last month about its affiliate fees outlook for the next affiliate fees cycle. Usually, affiliate fees negotiation contracts are for multiple years.

In 2017, the company expects Turner to have double-digit growth in affiliate fees. Time Warner said at the conference that it believes its network brands at Turner provide a better value for the money than, for instance, The Walt Disney Company’s (DIS) ESPN.

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As a result, Time Warner believes the strength of its programming and network brands would allow it room to negotiate for a rise in carriage fees. Time Warner also stated that since the company is open to the distribution of its content on a wide variety of platforms, including video on demand, it expects carriage fees to match these distribution rights.

The company also noted that currently, except for sports, its Turner business owns or controls almost all the programming across its networks.

Turner in fiscal 1Q17

As the above graph indicates, subscription revenues comprised 54.0% of Turner’s total revenues of $3.0 billion in fiscal 1Q17. Turner had subscription revenues of $1.6 billion in fiscal 1Q17, a 12.0% rise year-over-year.

The company’s subscription revenues in international markets rose in the mid-single digits, mainly driven by higher subscription revenues in Latin America.

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